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The growth of invisible exclusions

Insurance providers are beginning to increase the amount of invisible exclusions in their standard insurance policies, according to Insurance Journal.

Because policyholders are likely to balk at a policy that lays all of its exclusions bare, insurance providers have begun to increase the volume of invisible exclusions that accompany their policies, leaving policyholders to grapple with the consequences when disaster strikes.

In order to avoid lowering insurance rates to attract consumers deterred by coverage gaps, insurers have opted to disguise them. Both consumers and courts frown upon exclusions written into a policy. However, providers have realized that by hiding the exclusions with loopholes, they can sneak them in under the radar. For example, although insurers don't explicitly say that coverage gaps will occur when consumers change policies or switch insurers, that is the general practice.

Furthermore, providers are increasingly offering very specific "specialty policies" that cover such things as intellectual property and identity theft. However, due to their specificity, it is easy for consumers who own both a standard policy and a specialty policy to find that their provider states that coverage for an event falls into a gap between the two.